I think based on Bureau of Labor Statistics data, labor on average has been up by approximately 11% over that period. When we do the best job that we can to compare our progress to that of other automotive retailers, generally speaking, we’re seeing several hundred dollars of increases in SG&A per unit over that time period. And so I think that the gains that we’ve made are pretty significant. And then the sum of those things, I think, ultimately adds up to our unit economics. And then we do think that puts us in an incredibly powerful position. That gives us a lot of options in the future. I’m not sure that we are exactly sure the ways in which we will express those options, but it undoubtedly gives us a lot of options. On your second question, I would just say, the last several years have been very unique.
I think there’s been a ton of distortions in the market that have made things a little bit harder to kind of precisely forecast. Last year we saw rates going up quite a bit. In ‘21 we saw in the fourth quarter in ‘21 we saw prices going up quite a bit. So, I think it’s a little bit hard to know exactly what to expect out of seasonality. I do think over the last four weeks, given all the data sources that we have, we can see kind of industry-wide data. It looks like things have probably been a bit softer, not to a degree that I think is unique or merits a ton of attention, but definitely that’s been the direction. And so we’ll see where that goes. Like I said, I think it’s a little bit hard to even figure out exactly what seasonality should be right now given all the changes we’ve seen over the last couple of years.
Michael Baker: Great. Thank you. Fair enough. I appreciate the color.
Operator: Our next question comes from Seth Basham with Wedbush Securities. Please go ahead.
Seth Basham: Thanks a lot, and good afternoon. So my question is, when you pivot to growth for the first couple quarters that you do that, do you think that your leverage – your excess capacity will more than offset the cost to support that growth in terms of advertising, staffing, vehicle acquisition and operational inefficiencies that could result?
Ernie Garcia: So let me start with just pointing to history. Well, let me start with our expectations. Our expectations are that we expect our operational expenses to go down from here over time and we think they can go down despite growing over time and we expect our corporate expenses per unit to absolutely go down as we grow. So those are our expectations. In the data we provided, we provided a chart that kind of breaks out our operational expenses per unit going back in time all the way to Q1, 2018. And I do think looking at the period from Q1, 2018 through Q1, 2021 is somewhat useful. During that period, we were supporting 70% annualized growth continually. We were adding many, many markets. We were adding many, many inspection centers.
We were building the machine of Carvana as we were going and we did not have excess capacity to grow into and we were able to hold those expenses roughly flat. I think if you look at them, you’ll see variation to the tune of a couple hundred dollars. There’s kind of an outlier data point as COVID hit. But in general, they were relatively flat. And then you’ll also see that there were even some gains as we headed into the better seasonal parts of the year as well. So I think that’s pretty clear evidence that we’ve done this before. We’ve supported very high rates of growth and we’ve grown in a way that is more difficult, because we weren’t growing into existing infrastructure. We were building infrastructure as we went. So we don’t think that it’s obvious that there need to be meaningful expenses or expense increases in these line items as we turn to growth.
And overall, we absolutely expect there to be significant leverage. I think that’s very clear in our GPUs and very clear in our operational expenses. When you look at the gap between those two things, there’s a lot of room for growth to be extremely beneficial financially.
Seth Basham: If that’s the case, then I respect the decision to continue focusing on operational efficiency, but you’re leaving a lot of opportunity on the table. So why not pivot to growth sooner rather than later?
Ernie Garcia: I think financially in the near term, that would likely be the right choice. I think the scale of the unit economic benefits that would come from growth, I think that likely would be the right choice over the next couple of quarters, however kind of long we’re headed into that. I think when you look at it over a longer period of time, there is a fixed cost to reorienting the entire business. I walked you through Project Catapult, which we kicked off 18 months ago, and Operation 100, which we kicked off approximately seven months ago. Those are long-term projects with many underlying goals where the entire company is focused on driving different metrics in the right direction. And that focus has been tremendously beneficial, and we believe there are gains yet to be had.
And so I think that points in this direction of discipline suggests let’s keep getting those gains. I don’t mean to be defensive on this one, but I think if we go back in time even nine months ago, I think the average expectation consensus was on the order of $500 million of negative EBITDA this year. Well, it was kind of the expectation that people had for us, and over the last two quarters, it’s been positive $300 million. That’s obviously a tremendous difference, and I think that demonstrates the kind of value of that discipline, of setting clear goals and of marching toward them. But again, I think basically on math, I think the answer is clear. We should turn to growth. We just think that on math over a longer period of time, we should harvest the gains that we’re in position to get, and then we should turn to growth.
And when we do, we’ll be even more efficient than we would be today with even lower costs.
Seth Basham: Thank you.
Operator: Our next question comes from Ron Josey with Citi. Please go ahead.
